The Ministers of the OPEC plus, who met via video conference, rubberstamped in just 16 minutes the monthly production hike by 400,000 bpd.
In the shortest meeting so far in its history, OPEC+ decided to increase the collective production by 400,000 barrels per day (bpd) in March 2002. This left production plan unchanged and pushed Brent price above US$90/barrel.
Some analysts, and traders, had expected a higher production increase, considering the recent rally that has frustrated major oil-consuming nations, including the United States.
Earlier this week, Goldman Sachs had expressed the view that OPEC plus might decide to announce a larger production increase for March than the usual 400,000 bpd, keeping in view the recent oil rally to and the potential for renewed discontent from major oil importers at these high price levels.
OPEC plus confirmed the 400,000-bpd increase in record time and didn’t even plan a press conference after the meeting.
Brent Crude prices returned to US$90 per barrel just after news of the modest production increase and the record-short meeting broke.
While the nominal increase is modest, as in the previous seven months, many producers within the OPEC+ group are struggling to pump to their quotas, leaving an increasingly large gap between production increase on paper and actual growth in output, which leaves the market tighter than many analysts and forecasters, had anticipated just a few months ago.
Going forward, the market will be closely looking at how much of that increase OPEC plus can actually deliver, considering that half of its members have lagged in ramping up output to their quotas so far, while more producers—with few exceptions such as Saudi Arabia and the UAE—will be struggling to raise production.
According to the production table provided by OPEC, Saudi Arabia and Russia will each have a quota of 10.331 million bpd in March 2022.
The next OPEC plus meeting is scheduled for March 02, 2022.
Iraq fails in meeting oil production quota
Iraq, second-largest producer of OPEC and one of the leading OPEC plus members is struggling to boost its oil production as much as its quota in the pact allows. However, with January output of 120,000 barrels per day (bpd) was lower than its production ceiling, according to data from state marketing firm SOMO, according to a Reuters report.
The figures from SOMO showed that instead of rising, oil production in Iraq dropped in January by 63,000 bpd from December 2021. This was due to insufficient storage capacity, an oil official in Iraq told Reuters.
Exports from the second-largest OPEC producer after Saudi Arabia declined in January because of bad weather, maintenance of export terminals and technical issues, the official said.
Unplanned outages and a lack of capacity to pump more led to lower or stagnant production in January at OPEC members Iraq, Iran, Angola, Congo, and Libya, a Reuters survey showed earlier this week.
Iraq and several other producers among OPEC and OPEC plus are not pumping as much quantity as the pact allow. This is tightening the market and distorting analyst assumptions about market balances.
For half a year now, OPEC plus has actually added lower volumes to the market each month than the 400,000 bpd nominal monthly increase announced in each of the OPEC plus meeting since August 2021.
At its latest monthly meeting on Wednesday, the OPEC+ group announced another 400,000 bpd increase in production for March.
While the nominal increase is modest, as in the previous seven months, many producers within the OPEC plus group are struggling to pump to their quotas, leaving an increasingly large gap between production increase on paper and actual growth in output, which leaves the market tighter than many analysts and forecasters, had anticipated just a few months ago.
Going forward, the market will be closely looking at how much of that increase OPEC plus can actually deliver, considering that half of its members have lagged in ramping up output to their quotas so far, while more producers—with few exceptions such as Saudi Arabia and the UAE—will be struggling to raise production.